Fed holds line; rate hikes still on the table – or are they?

The Federal Reserve opted not to raise interest rates at its January meeting and gave no indication that it was changing course on its rate-hiking path ahead.

Amid substantial turmoil in financial markets, the Federal Open Market Committee statement issued Wednesday did say it was “closely monitoring global economic and financial developments,” referring to the volatility that led most of Wall Street to dismiss the possibility of a rate hike this month.

The Federal Reserve may say it’s bent on more interest rate hikes this year, but it’s much more likely it will need to cut instead, warned Austan Goolsbee, a former adviser to President Barack Obama.

“They want to raise rates; they want to get back to normal. They have said they thought they would raise four times plus this year and I don’t think there’s any scenario in my mind that they’ll be able to do anything remotely like that,” Austan Goolsbee, who was chairman of Obama’s Council of Economic Advisers from 2010-11, told CNBC’s Squawk Box.

Goolsbee, who is now a professor at the University of Chicago’s Booth School of Business, said, “It’s far more likely that they’ll have to reverse themselves as a number of other countries have, like Sweden and others, where they raise the rates thinking it’ll be fine and then have to drop it.”